MAE101 Study Guide - Final Guide: Comparative Advantage, Fixed Cost, Lead

• School: Deakin University
• Department: Business and Law
• Course: MAE101
• Professor: Ratcliffe

Document Summary

When unlimited wants exceed the limited resources available to fulfil those wants. Study of how households and firms make choices, their interactions in markets and government intervention. The highest-valued alternative that must be given up in order to obtain a good or engage in a service. An increase in income leads to an increase in quantity demanded. An increase in income leads to a decrease in demand. A decrease in price of one good leads to a decrease in demand for the other. A decrease in price of one good leads to an increase in demand for the other. How much quantity demanded varies when price changes. Inelastic demand = <1 elastic demand = > 1. The response of demand for one good to changes in the price of another good (complementary, substitutes etc. ) A legal maximum on the price of a good only binding if set below equilibrium price.